Continental Auto Ins. Underwriters v. Menuskin

• Decision Date: 05 March 1931
• Docket Number: 3 Div. 937.
• Citation: 132 So. 883,222 Ala. 370
• Parties: CONTINENTAL AUTO INS. UNDERWRITERS v. MENUSKIN ET AL.
• Court: Alabama Supreme Court

132 So. 883

222 Ala. 370

CONTINENTAL AUTO INS. UNDERWRITERS v. MENUSKIN ET AL.

3 Div. 937.

Supreme Court of Alabama

March 5, 1931

Appeal from Circuit Court, Montgomery County; Walter B. Jones Judge.

Bill in equity by M. Menuskin against the Continental Auto Insurance Underwriters and another, to require money due under an insurance policy to be applied to the satisfaction of a judgment against assured. From a decree overruling a demurrer to the bill, the named respondent appeals.

Reversed and remanded.

John S Tilley and Ball & Ball, all of Montgomery, for appellant.

Weil Stakely & Cater, of Montgomery, for appellees.

FOSTER J.

Appellee recovered a judgment in a court of Tennessee for damages sustained for personal injuries received in Tennessee against a bus operator whose operations extended between Fort Payne, Ala., to Chattanooga, Tenn., under a certificate of authority from the Alabama Public Service Commission. The bus operator executed a policy of insurance which recited that it was given in pursuance of and is to be construed in accordance with an act of the Legislature of Alabama approved August 23, 1927, known as the Alabama Motor Carrier Act of 1927 (Gen. Acts 1927, p. 309), and expressly agreed to pay within its limits in amount any final judgment for personal injuries to a passenger while carried on the bus, caused by its negligent operator, and further "that upon its failure to pay any such final judgment, such judgment creditor may maintain an action in any court of competent jurisdiction to compel such payment." The act of 1927, pp. 312, 313, § 5, referred to in the policy, and made a part of it by express reference, contains the provision that: "Every such insurance policy shall be for the benefit of and subject to action thereon by any person who shall sustain an actionable injury protected thereby, notwithstanding any provision in such insurance policy to the contrary."

Complainant alleges that he was within the protection of the policy and sustained an injury for which his judgment was rendered in Tennessee against the insured, and thereby the insurer became liable under the terms of the policy to pay the judgment.

As pointed out in our case of Fite v. Pearson, 215 Ala. 521, 111 So. 15, if the contract so authorizes, a third party beneficiary may sue upon it, though he furnished no part of the consideration. Meyerson v. New Idea Hosiery Co., 217 Ala. 153, 115 So. 94, 55 A. L. R. 231; 36 Corpus Juris, 1132. This has also been extended to include contracts in the nature of a bond conditioned to protect the principal obligee from liability on account of certain claims, so that suits for the use of the claimants may be maintained on the contract. Fid. & Dep. Co. v. Rainer, 220 Ala. 262, 125 So. 55.

In the former instance suit may be in the name of the third party; in the latter it is brought for his use. In neither instance is a resort to equity essential. Upon the basis of those authorities, we are clear that appellee can sue appellant at law on the facts alleged.

The courts of this state take jurisdiction of a cause of action which arose in another state where proper service may be obtained in Alabama. Section 5681, Code. The agreement to pay a final judgment based upon a certain nature of injury, and that the judgment creditor may by proper action compel the insurer to pay it, does not limit jurisdiction to the state in which the judgment shall be rendered. The judgment in a proper court in Tennessee against the bus operator therefore fixes a contract liability on the policy in favor of the judgment plaintiff against the insurer. Certainly therefore a proper court of Alabama may enforce that contract if due service is had on defendant as the insurer. There is no question here presented as to due service on appellant, defendant in the circuit court, nor its liability to suit in Alabama. We see nothing, therefore, which would prevent this appellee, as plaintiff, from maintaining a suit at law in Alabama against appellant on this contract obligation.

The very statement of that conclusion would be sufficient to deny the right to maintain a suit in equity, unless a statute or some distinctly equitable principle authorizes equitable jurisdiction.

The claim is made that this results from section 8377, Code. That section is of course with reference only to such contracts as are governed by the laws of Alabama, including sections 8376 and 8377, Code, and would control the question, if its conditions are complied with. Those sections are not merely remedial, but in fact are read into an Alabama contract, and nullify any of its provisions which limit the indemnity to loss to the insured, but extend it to indemnity against liability. The rights of the injured person under those provisions are held to be secondary and not primary. Globe Indemnity Co. v. Martin, 214 Ala. 646, 108 So. 761; George v. Employers' Liability, 219 Ala. 307, 122 So. 175.

When a judgment is rendered in favor of an injured person insured by a policy executed under the statute, the liability of the insurer is thereby hypothecated to the injured party, as plaintiff in the judgment, and establishes in his favor a lien to enforce his judgment. That lien is by that statute enforceable in equity. Lorando v. Gethro, 228 Mass 181, 117 N.E. 185, 1 A. L. R. 1374...